Question

Weller Company acquires a delivery truck at a cost of $42,000. The truck is expected to have a residual value of $9,000 at the end of its 4-year useful life. Compute annual depreciation expense for the first and second years using the straight-line method

Answer 1

The annual depreciation expense for the delivery truck is calculated using the straight-line method, yielding an expense of $8,250 for both the first and second years.

Step-by-step explanation:

We need to calculate the annual depreciation expense of a delivery truck using the straight-line method.

To compute the depreciation expense, we follow these steps:

1. Subtract the residual value from the cost of the truck to get the total amount that will be depreciated.
2. Divide the total depreciable amount by the useful life of the truck to find the annual depreciation expense.

Step 1: $42,000 (cost) - $9,000 (residual value) = $33,000 (total depreciable amount).

Step 2: $33,000 / 4 years (useful life) = $8,250 annual depreciation expense.

There fore, the annual depreciation expense using the straight-line method for both the first and second years is $8,250.

Answer 2

To calculate the annual depreciation expense using the straight-line method, subtract the residual value from the cost, then divide by the asset's useful life. For the Weller Company truck, it amounts to $8,250 per year for each of the first two years.

Step-by-step explanation:

To compute the annual depreciation expense for the first and second years using the straight-line method, you need to subtract the residual value from the cost of the asset and then divide by the useful life of the asset. The cost of the Weller Company's delivery truck is $42,000, and its residual value at the end of its 4-year useful life is $9,000. So, the depreciable amount is cost minus residual value, which is $42,000 - $9,000 = $33,000. This amount is then divided by the useful life of the truck, which is 4 years.

The annual depreciation expense calculation would be: $33,000 / 4 = $8,250 per year. Therefore, the annual depreciation expense for both the first and the second year is $8,250.